|
|
|
In recent years the Government has introduced legislation to prevent
inactive partners from benefiting from sideways loss relief. This relief
enables trading losses to be set against other income and gains and has
underpinned many tax shelters.
To get around the blocking legislation and to capture the same tax benefits,
a number of these shelters have been reconfigured with the investors acting
as sole traders. The Government has now decided to extend the legislation
and deny loss relief to inactive individuals trading on their own account.
Inactive for this purpose means an average of less than 10 hours a week
actively involved in the trade’s commercial activities.
No sideways loss relief will be allowed at all for losses arising on or
after 12 March 2008 where tax avoidance was the main reason for investing.
Otherwise relief will be limited to £25,000 per annum.
The new rules will not apply to members of Lloyd’s or those benefiting from
the statutory film reliefs for British films.
Our view
This change was expected and shows how HMRC has benefited from
information received under the disclosure regime. |
|
|
